LE PEST C Analysis:

Legal Ecological

Competitive Political
ORGANIZATION
Technological Economic

Social

Though there are various types of business environment, but they can be classified as the
following seven main groups:

1) Legal: It is well known that every country has a number of legal policies to ensure that the
interests of business organizations do not run counter to national interests. Right from the stage
of incorporation of organizations, their listing in stock exchange, reprisal of customer
complaints, payment of tax to government, manufacturing practices, human resources
development to pricing of products and services, a number of legal regulations have to be
fulfilled. The Legal Environment forces are:
i) Commercial Law
ii) Industrial Law
iii) Environment Protection Law
iv) Consumer Interest & Protection Law

2) Ecological: Ecological environment also called a natural environment. Natural environment is

also external factor of business. Because, business cannot fully control on natural environment.
The Ecological Forces are:
i) Climatic Condition
ii) Weather
iii) Rainfall
iv) Minerals
v) Soils & so on.

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3) Political: Political factors are basically to what measures the government to get involved in
the economy. Specifically, political factors include areas such as tax policy, labor law,
environmental law, trade restrictions, tariffs, and political stability. Political factors may also
include goods and services which the government wants to provide or be provided and those that
the government does not want to be provided.

4) Economic: Economic environment is main element of business environment. The economic

environment refers to all those economic factors, which have bearing on the performance of a
business unit. Business depends on the economic environment to buy its input as well as to sell
it. The economic factors are:
i) Savings & Investments
ii) Capital Money & Banking
iii) Gross National Product (GNP)
iv) Balance of Trade Position

5) Social: Social factors include the cultural aspects and include health awareness, population
growth rate, age distribution, career attitudes and importance on safety. Trends in social factors
affect the demand for a company's products and how that company operates.

6) Technological: Technological factors include technological aspects such as Resource &

Development (R&D) activity, automation, technology incentives and the rate of technological
change. They can determine barriers to entry, minimum efficient production level and influence
outsourcing decisions.

7) Competitive Forces: Factors that influence the competitive position of a company in an

industry or market. Competitive forces include (1) bargaining power of the buyers and suppliers,
(2) threat of new entrants, and (3) rivalry among existing companies.

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Dartboard Model:

The Dartboard configuration gives the organization pride of place in the center while radiating
from it are eight categories of environmental concerns. These are given in below

1. Technology Sector: Technology sector refers the improvement in the field of technology
which affects business by new invention of production & other improvements in
techniques to perform the business.

2. Industry Raw Material Market Sector: Raw material market sector refers those types
of market from where industry collects their raw material to produce product.
Raw material market is two types

A. Capital market sector

B. Natural market sector

3. Human Resource Sector: Human resources sector is the set of individuals who make up
the workforce of an organization, business sector or economy. Human capital is
sometimes used synonymously with human resource.

4. Finance Sector: Finance sector is a category of stocks containing firms that provide
financial services to commercial & retail customers. This sector includes Banks,
Investments funds, Insurance companies & Real Estate.

5. International Sector: International sector mostly means something involving more than
a single country. The term international as a word means involvement of interaction
between encompassing more than one nation or beyond national boundaries.

6. Social-Cultural Sector: A social cultural sector is a human population viewed in its

ecological context & as one of the many subsystem of a larger ecological system.
The term of social culture sector embraces three concepts, such as..
A. Society
B. Culture
C. System

7. Government sector: The government sector consists of the following resident

institutional units such as all units of central, state of local government, all social security
funds at each level of government & all non-market or non-profit institutions that are
controlled & financed by government units.

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8. Economy: An economy or economic system consists of the production, distribution or
trade & consumption of limited goods & service by different agents in a given
geographical location.

Figure: Dartboard Model